N.M. Stat. § 41-4-20 (2026)

A. It shall be the duty of governmental entities to cover every risk for which immunity
has been waived under the provisions of the Tort Claims Act or any liability imposed
under Section 41-4-4 NMSA 1978 as follows:

       (1)    local public bodies shall cover every such risk or liability as follows:

           (a) for a risk for which immunity has been waived pursuant to Sections 41-4-
9, 41-4-10 and 41-4-12 NMSA 1978, the local public body shall cover the risk, and for
any commercially uninsurable risk for which public liability fund coverage is made
available, the local public body may insure the risk in accordance with the provisions of
Section 41-4-25 NMSA 1978;

           (b) for excess liability for damages arising under and subject to the
substantive law of a jurisdiction other than New Mexico, including but not limited to other
states, territories and possessions and the United States of America, the local public
body shall provide coverage in accordance with the provisions of Subsection B of
Section 41-4-27 [41-4-28] NMSA 1978, if coverage is available; and

          (c) for a risk or liability not covered pursuant to Subparagraphs (a) and (b) of
this paragraph, the local public body shall purchase insurance, establish reserves or
provide a combination of insurance and reserves or provide insurance in any other
manner authorized by law; and

       (2)    for state agencies, the risk management division shall insure or otherwise
cover every such risk or liability in accordance with the provisions of Section 41-4-23
NMSA 1978. Coverage shall include but is not limited to coverage for all such liability
arising under and subject to the substantive law of a jurisdiction other than New Mexico,
including but not limited to other states, territories and possessions and the United
States of America.

    B. The department of finance and administration shall not approve the budget of
any governmental entity that has not budgeted an adequate amount of money to insure
or otherwise cover pursuant to this section or Section 3-62-2 NMSA 1978 every risk of
the governmental entity for which immunity has been waived under the provisions of the
Tort Claims Act or liability imposed under Section 41-4-4 NMSA 1978. The public school
finance division of the department of finance and administration shall not approve the
budget of any school district which has failed to budget sufficient revenues to insure or
otherwise cover pursuant to this section every risk for which immunity has been waived
pursuant to the provisions of the Tort Claims Act or liability imposed under Section 41-4-
4 NMSA 1978.

   C. No liability insurance may be purchased by any governmental entity other than
as authorized by the Tort Claims Act.

History: Laws 1976, ch. 58, § 18; 1953 Comp., § 5-14-18; Laws 1977, ch. 247, § 52;
1977, ch. 386, § 15; 1978, ch. 166, § 3; 1979, ch. 287, § 4; 1979, ch. 392, § 2; 1981, ch.
268, § 1.

                                     ANNOTATIONS

Bracketed material. — The bracketed material was inserted by the compiler to correct
an apparently incorrect reference and is not part of the law.

Existence of insurance as waiver of immunity. — Without specific authorization by
the legislature, the existence of insurance covering a governmental agency does not
constitute a waiver of immunity from suit. Chavez v. Mountainair Sch. Bd., 1969-NMCA-
060, 80 N.M. 450, 457 P.2d 382.

Where insufficiency of insurance not raised. — No question of immunity from suit
existed where no claim was made that the insurance was insufficient to cover the
amount of the verdict. Williams v. Town of Silver City, 1972-NMCA-132, 84 N.M. 279,
502 P.2d 304, cert. denied, 84 N.M. 271, 502 P.2d 296.

Two-year statute of limitations applicable to negligence suit involving public
utility's employee. — Section 41-4-15 NMSA 1978 of the Tort Claims Act, allowing two
years to bring suit, and not the one-year limitation of 37-1-24 NMSA 1978, which refers
to the time for bringing suits in negligence against any city, town or village, or any
officers thereof, applies to a suit for negligence of a public employee in the operation of
a public utility. Cozart v. Town of Bernalillo, 1983-NMCA-053, 99 N.M. 737, 663 P.2d
713.

A state agency cannot contractually expand the legislature's restriction on tort
liability. — Indemnification is a contractual obligation, and the legislature has waived
sovereign immunity for valid written contracts. For tort liability, however, the legislature
has waived sovereign immunity only within the limitation of the Tort Claims Act, and
therefore a state agency cannot contractually expand the legislature's restriction on tort
liability. 2025 Op. Att'y Gen. No. 25-05.

Naming the United States as an additional insured on a commercial general
liability insurance policy does not violate the Tort Claims Act. — Where the United
States department of agriculture and the New Mexico general services department
proposed an agreement where the state of New Mexico, in exchange for the state's use
of federal land under special use permits issued by the United States forest service,
agreed to indemnify the United States for tort liability associated with the state's use of
the federal lands up to the liability limits in the Tort Claims Act (TCA) by acquiring
commercial general liability insurance, with the United States named as an additional
insured, for communications use leases and provide for self-insurance, with the United
States named as an additional insured, for all special use authorizations issued for non-
communications uses of federal lands, there is no prohibition for naming the United
States as an additional insured on a commercial general liability insurance policy,
because the provision that the state's indemnity obligation is subject to the limits of
liability under the TCA is consistent with the legislature's limited waiver of sovereign
immunity under 41-4-2 NMSA 1978, and naming an additional insured on a commercial
general liability insurance policy purchased to satisfy the indemnity requirements does
not expose the state to any greater risk under the TCA and only obligates the state to
pay for insurance costs. 2025 Op. Att'y Gen. No. 25-05.

State agency's self-insurance policy naming the United States as an additional
insured expands the state's liability risk beyond the legislature's waiver of
sovereign immunity and thus violates the Tort Claims Act. — Where the United
States department of agriculture and the New Mexico general services department
proposed an agreement where the state of New Mexico, in exchange for the state's use
of federal land under special use permits issued by the United States forest service,
agreed to indemnify the United States for tort liability associated with the state's use of
the federal lands up to the liability limits in the Tort Claims Act (TCA) by acquiring
commercial general liability insurance, with the United States named as an additional
insured, for communications use leases and provide for self-insurance, with the United
States named as an additional insured, for all special use authorizations issued for non-
communications uses of federal lands, the self-insurance proposal goes beyond the
statutorily authorized indemnity for the state and local public bodies to create indemnity
for the United States as an additional named insured, and this indemnity is not restricted
to the limited wavier of liability in the TCA and would exceed the maximum liability in the
TCA. 2025 Op. Att'y Gen. No. 25-05.

Law reviews. — For survey, "Torts: Sovereign and Governmental Immunity in New
Mexico," see 6 N.M.L. Rev. 249 (1976).

Am. Jur. 2d, A.L.R. and C.J.S. references. — Liability or indemnity insurance carried
by governmental unit as affecting immunity from tort liability, 68 A.L.R.2d 1437.

When does statute of limitations begin to run upon an action by subrogated insurer
against third-party tortfeasor, 91 A.L.R.3d 844.